Areva SA was hit by delays at the Olkiluoto-3 nuclear plant it’s building in Finland.
The shares slumped as much as 23 percent to 9.3 euros, the biggest intraday drop since January 1999. They traded 17 percent lower at 9.98 euros as of 10:30 a.m. in Paris.
Delays at the Olkiluoto-3 nuclear plant in Finland and a slower-than-expected restart of Japanese reactors are hurting cash flow, the company said yesterday. It will outline targets for the 2015-2017 period when it releases 2014 annual results. “Areva is undertaking a review of its strategic outlook and mid-term funding plan,” the company said.
Areva, about 87 percent owned by the French state, has been racking up losses in recent years after the Fukushima explosion in 2011 prompted nuclear plant closures in
Japan and Germany, while the use of shale gas soared in the U.S. European utilities have made cutbacks in response to sluggish economic growth in the region and losses on renewable-energy projects.
The company is in the middle of a management shakeup after Chief Executive Officer Luc Oursel stepped down for health reasons last month. It has cut investment plans in a bid to preserve its investment-grade credit rating and is trying to sell a hybrid bond to shore up its balance sheet.
Strategic Review
“Areva will continue burning cash in 2014 and 2015, and could generate limited free cash flow in 2016,” Pierre Boucheny, an analyst at Kepler Cheuvreux, said in a note. “We cannot exclude a recapitalization scenario.”Areva cut a 2014 forecast in August. The company expects a 10 percent decrease in organic revenue and a margin for earnings before interest, taxes, depreciation and amortization of about 7 percent of sales. The outlook for Areva’s revenue and profit margin for 2014 remains unchanged, the company said today.
Areva had a net loss of 694 million euros ($870 million) in the first half as like-for-like sales dropped 12 percent.
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